* As Reserve Bank of Malawi (RBM) scales up national awareness campaign on benefits of digital financial services
* RBM spent over MK23 billion last year to reprint damaged currency notes—Deputy Governor, McDonald Mafuta Mwale
* These printers and suppliers are paid in US$ which means the country is losing a lot of forex just to replace damaged notes
* If more Malawians adopt digital financial services, this figure will go down as there will be no demand to print more notes
Analysis by Wanangwa Tembo, MANA
Malawi is one of the countries where there is low adoption of digital financial services with the majority stuck with the traditional cash payment system, according to the Reserve Bank of Malawi (RBM), is not only costly but also drains the scarce forex.
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The RBM has since launched a national awareness campaign on the benefits of using digital financial services which seeks to achieve a cashless economy being implemented by in partnership with the Ministry of Finance with financial support from the African Development Bank.
The use of hard cash is a vexatious cycle of doing business such that every month end, when salaries are in, many people rush to the bank to make withdrawals where they encounter long queues in the banking hall as well as an equally long and snaking queue at the auto-teller machine (ATM).
After close to an hour, they bundles of K5,000 notes and go on to spend another valuable business time on another queue, to pay for water, electricity bills and other services — and the cycle will repeat the other month.
At its awareness event in Kasungu, where RBM disclosed that the traditional cash payment system is not only costly but also drains the scarce forex, saying the RBM spent over K23 billion last year to reprint damaged currency notes.
“These printers and suppliers are paid in US$ which means the country is losing a lot of forex just to replace damaged notes,” said RBM Deputy Governor McDonald Mafuta Mwale. “If more Malawians adopt digital financial services, our projections show this figure will go down as there will be no demand to print more notes.”
Funded at US$14.3 million, the campaign started in July to cover all the country’s 28 districts to scale up use of digital payment methods amongst communities: “The world is going digital — why should Malawi be left behind?” Mwale said.
“It is important now that we should encourage the population to go digital. One is for safety, efficiency and effectiveness when it comes to cash transfers, payments of bills and payments for any other goods or services.
“If we use more of the digital methods, then our demand to produce the actual Kwacha will go down and the bill to produce will also go down and we save the already scarce forex.”
Awareness campaign in Kasungu attended by Mwale (right)
Mwale added that it is high time Malawians adopted the modern ways of transacting which are convenient, reliable and secure: “Keeping money in houses is not safe — consider incidences of fire, for example.
“With digital platforms, safety is guaranteed and transacting is also simplified as you can pay while in the comfort of your house and the supplier with bring the goods for you.
“As we go digital, there are some people trying hard to manipulate the system so that they scam others. So there are those risks and we have to teach people on how they can be protected from such scams.
“There are also issues of unreliable networks — these are the issues we need to address as we run the campaign. People adopting digital methods should have minimal encounters with such challenges.”
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Mwale further said government will work hand in hand with the service providers to improve network signals to ensure that there are reduced challenges that discourage people from adopting these technologies, which include mobile phones, internet, ATMs, banks, points of sale and digital village banking, among others.
The campaign has identified women, persons with disabilities, youths, small to medium enterprises, internally displaced people, the illiterate and the rural population as the targeted marginalised audiences.
“We want to get to every corner of the country raising awareness about the opportunities available in the digital financial services,” said Joshua Kunkumbira, the campaign lead person for Kasungu and Dowa.
“For example, people think we need to withdraw cash on ATMs or Mpamba and Airtel Money agents and go somewhere to pay bills — yet you can do that without necessarily withdrawing the money.
“Rural communities, including those in village banks and recipients of social cash transfers, need to be educated on the benefits of digital financial services, such as using Airtel Money, Mpamba, and bank accounts for transactions.
“Village banks must go digital. The youths that are engaged in businesses must be encouraged to transact digitally and not forgetting persons with disabilities whom we must identify and ask them about the challenges they encounter so that they are addressed.”
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Kunkumbira also said the campaign will tackle issues of fraud and phishing schemes, over indebtedness, social engineering scams, data and identity theft and emerging innovations so that digital service users are protected from evil schemes.
“So in specific terms, we want to create awareness of digital financial services among the general public in order to increase usage and adoption.
“We also want to reinforce consumers trust in digital finance services opportunities and help local populations to better deal with the associated challenges, and also change perceptions and build awareness of risks, available consumer guidelines, costs and benefits in order to gain acceptance and utilisation among users.”
African Development Bank representative, Albert Mafusile, said the Pan-African development and financial institution believes that digital financial services are safe, efficient and cost-effective.
“It is our hope that through the use of digital financial services, the Malawian public will enjoy the safety associated with the transactions which give you freedom to do anywhere as long as you have network.
“It is in our interest to see that these services are provided efficiently to those that use them.”
Mafusile added that while access to digital financial services in the country is growing, the services have not yet reached everyone — hence the need for awareness raising activities.
“This campaign gives the opportunity to financial services to showcase what they offer and as the public get educated, it will be easier for them to start using them.
“For us, we want an inclusive financial services sector that does not leave anybody behind. And it is our hope that the partnership that African Development Bank has with Malawi will continue to grow,” he said.
Lack of information, fear of fraud and poor network feature highly as factors discouraging people to adopt and use digital financial services in the country.
As of March 2024, fraud on mobile money had decreased by 53% from K28 million to K13 million on Airtel Money service and 15% from K2.7 million to K2.3 million on TNM Mpamba.
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Meanwhile, Bankers Association of Malawi (BAM) will from tomorrow, August 22-24, hold its annual conference at Sunbird Nkopola in Mangochi under the theme; ‘Bridging the Gap: Inclusive Banking and Sustainable Development for All’.
The theme resonates well with RBM’s national awareness campaign on benefits of digital financial services, as the financial services regulator will play a pivotal role in the deliberations.
BAM’s Chief Executive Officer, Lyness Nkungula emphasised that the conference is more than just a gathering but is a vital pivotal platform for the industry to exchange ideas, share best practices and discuss strategies that foster collaboration and drive progress within the financial sector.
“Such interactions are crucial, as they empower us to collectively contribute to the economic growth and development of our beloved nation,” Nkungula said on Monday when CDH Investment Bank (CDHIB) invested K1 million towards the successful hosting of the conference.
She stressed that theme is both timely and essential as it reflects the banking industry’s “shared commitment to exploring innovative solutions, crafting inclusive policies, and fostering collaborations that ensure accessible, equitable, and sustainable financial services for every Malawian, particularly those who have been historically underserved”.
“We have an impressive lineup of distinguished speakers who will delve into topics that align with this theme, offering insights that will undoubtedly shape the future of our industry.”
On their part, CDHIB Chief Business Development Officer, Jamal Kamoto said the support towards the conference reaffirms their commitment towards assisting the Malawi nation in providing inclusive banking solutions for sustainable development for all.
He added that this resonates well with their business, adding: “In a world where inequality and exclusion persist, it is crucial that we come together to address these challenges and work towards a more inclusive and sustainable future for everyone.
The banking sector, plays a critical role in sustainable development. Access to financial services is a fundamental right, yet millions of people around the world are still excluded from the formal banking system.
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“This exclusion not only hinders individual financial security and economic growth but also widens the gap between the haves and have-nots.”
Kamoto added that bridging this gap requires a concerted effort from all stakeholders, including governments, financial institutions such as CDHIB itself, and civil society, saying: “We need to design and implement inclusive banking solutions that cater for the needs of all members of society, including those in underserved and marginalised communities.
“This involves leveraging technology to provide banking services in remote areas, offering engaging financial literacy programs, and creating tailored financial products for small businesses and low-income individuals.
“This conference is significant as it provides a forum for stakeholders to discuss and come up with action plans on how we can support sustainable development initiatives, on top of what is already being done.”
Speakers at the conference include Managing Director of Airtel Malawi Charles Kamoto, and Dr. Wisely Phiri, Chief Executive Officer for Sparc Systems Ltd.
Kamoto is expected to bring a wealth of experience and insight from his leadership role in one of the country’s leading telecommunications companies, while Wisely Phiri is widely recognised as a visionary leader in technology and innovation in Malawi.
BAM’s Facebook page described Phiri’s contributions to the ICT sector as reaching far beyond his role at Sparc Systems, making a significant impact on the industry as a whole”.—Additional reporting by Duncan Mlanjira, Maravi Express
